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SUBJECT:  Capital Accumulation Provision (CAP) Accrual Credit

In November 2001, the UC Regents approved an amendment to the University of California Retirement Plan (UCRP) to provide a Capital Accumulation Provision (CAP II) accrual credit to Active Members of UCRP who meet certain eligibility requirements.

The CAP II accrual credit provides an allocation of 3% of covered compensation (currently annual compensation up to $170,000) earned for the period beginning April 1, 2001 through March 31, 2002. This special allocation, designated as CAP II (to differentiate from CAP allocations to eligible members during the period of 1992-1994), was awarded to all UC faculty and staff who were Active Members of UCRP on April 1, 2002. Eligible members include those on sabbatical or approved leave of absence. Inactive and Retired Members, and those receiving UCRP Disability income are not eligible.

The CAP II allocation is designed to supplement other UCRP benefits. The allocation is being paid in addition to the annual salary merit increase program that was effective on October 1, 2001. The CAP II allocation will earn interest based on an annual percentage yield of 7.5%. The allocation is immediately vested upon deposit, and is payable in a lump sum at the time UC employment ends (e.g. separation or retirement).

Although CAP II is effective April 1, 2002, it will not be posted in the UC Retirement System (UCRS) Membership System until late May. Thus, Active Members will not be able to view the allocation on their on-line account statement until that time.

                                                Rogers Davis
                                                Assistant Vice Chancellor -
                                                Human Resources